Table 10.2 Archie Toys Is a Retailer Operating Out of Wichita, Kansas

Multiple Choice

Table 10.2
Archie Toys is a retailer operating out of Wichita, Kansas. It experiences a seasonal demand pattern for its services. Labor requirements over a typical six-month period follow. The workforce requirements (expressed as number of employees) are given in the following table for the next six periods.

Costs associated with operations are as follows:
Wages = $800 per worker per month
Hiring cost = $300 per worker
Layoff cost = $200 per worker
The current workforce level is nine workers, and the undertime is paid for. Use the spreadsheet approach and the preceding data to answer the following questions.
-Use the information in Table 10.2. Suppose that overtime is allowed up to 25% of the regular-time capacity, and that overtime wages are 150% of the regular-time rate. The total cost of the level strategy with overtime and undertime, which also minimizes undertime, is:

A) less than or equal to $60,000.
B) greater than $60,000 but less than or equal to $65,000.
C) greater than $65,000 but less than or equal to $70,000.
D) greater than $70,000.